Widely followed growth investors added to some of their out-of-favor holdings on Friday.
Cathie Wood may or may not be a fan of playground equipment, but there’s no denying that she’s always had her eye on slides. The founder, CEO and stock picker at ARK Invest has a habit of buying up stocks that have fallen out of favor, and she did just that on the final trading day of last week.
Ark bought just three shares on Friday, adding to its existing holdings. CrowdStrike Holdings (CRWD -12.28%), Okro (Okro 2.09%)and GitLab (GTLB -1.49%)CrowdStrike plunged 11% after suffering a serious outage, while Oklo and GitLab rose slightly on Friday but their shares are still down 18% and 15%, respectively, so far this year.
Will these three stocks recover? Let’s take a closer look at Wood’s three recent purchases.
1. CrowdStrike Holdings
Unfortunately, CrowdStrike made a name for itself on Friday. The cybersecurity specialists prefer to work behind the scenes to help their growing client base fend off online threats, and last weekend an update to the platform found CrowdStrike to be its own enemy. It caused widespread power outages.
IT outages forced the cancellation of flights for several airlines. It also created a difficult day Friday for banks, hospitals and other businesses caught up in a barrage of glitchy updates. CrowdStrike’s stock price fell after a day, but it remains a good investment for most shareholders. The stock has doubled in the past year and more than tripled in the past five years.
Image source: Getty Images.
The real test for CrowdStrike is yet to come. The company’s reputation took a big hit on Friday, but it probably won’t be enough to turn the market away from its Falcon line of cloud-based cybersecurity solutions. It just needs to avoid another IT outage anytime soon.
CrowdStrike finally turned a reported profit last year. Earnings have been rising so far this year. The company has consistently delivered “better than expected performance and earnings growth.” The next few quarters will be crucial to ensure customers don’t abandon CrowdStrike.
2. Okro
To Wood, Oklo is more than just a four-letter word: It’s a fast-fission technology and nuclear recycling company whose goal is to help power plants provide affordable, clean energy at scale, though it’s not expanding yet.
Oklo has been public for three years but still doesn’t have a profit, and analysts don’t expect it to arrive until at least 2027. In the meantime, its losses have been growing. The company’s shares rose earlier this year but have since fallen by more than half since hitting an all-time high in May.
The company announced last week that it had completed the first successful full demonstration of its advanced fuel-recycling process. But investors still need to be patient. Wood has several years of experience, but he has the patience to buy potential long-term winners when they fall in value.
3. GitLab
GitLab’s business is slowing, but the slowdown is relative: After three years of revenue growth of more than 66%, last year its revenue grew just 37%. Most companies would like to grow at that rate, but investors are expecting more.
GitLab started as an open-source platform to help programmers collaborate on code and has evolved into a profitable, flexible platform that helps organizations’ technical teams build, test, and deploy software.
stock Fall in MarchThe company warned that sales will slow further this fiscal year. Analysts currently expect sales to grow 27% this year. The company’s shares aren’t cheap, but its profits for the past four quarters have beaten Wall Street targets by a wide margin.
Rick Munarriz The Motley Fool has invested in CrowdStrike. The Motley Fool has invested in and recommends CrowdStrike and GitLab. The Motley Fool Disclosure Policy.
